Category Archives: Foreign Direct Investment

The Mongolian Government Going Online



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Mongolia may have a reputation of a sparsely populated nomadic country, but the Mongolian government in increasingly adopting the technologies of the 21st century to reach and serve the people even in the furthest reaches of the steppe. Several major government agencies have implemented systems to provide services online with great success. Foreign investors are able to take advantage of these systems to make doing business in Mongolia more effective and efficient.

The tax authority is one example. In 2014 the tax authority implemented a new online tax filing and tax payment system. A digital signature issued by the tax office is required to access the online tax portal. An individual authorized by a company to sign financial statements and tax returns must apply for a digital signature in order to be able to access the online tax portal system. The online tax filing and tax payments have proven to be more cost and time saving. The social insurance office has taken inspiration from this system and is now also online.

Recently several government bodies, such as Ministry of Finance, Bank of Mongolia, General Tax Administration, National Transportation Department and others, have collaborated and launch a website www.smartcar.mn. Through this site vehicle owners, both individuals and organizations, can pay vehicle taxes, driver’s insurance payments, traffic tickets and receive other vehicle related services.

The General Authority for Intellectual Property and State Registration recently announced that they are in process of preparation and implementation of a “One citizen, one registration” project. According to officials, one of the main purposes of this project is to create a unified national registration database for ownership and property related information of natural personas and legal entities. This project aims to eliminate duplication and discrepancies in information over multiple platforms and create a unified national registration database. Such database is planned to accessible online both for internal access for government bodies as well as to general public with certain limitations. This project envisages the use of digital signatures by individuals to obtain online services from government bodies. Currently, digital signatures used only by legal entities for online tax filing and public tenders (bidding). While this project is in planning stages and has yet to be approved by the Government, we have high hopes for successful implementation. Officials claim that, if this project gets approved, this will decrease the amount of paperwork, will be cost and time saving both for general public and government bodies, government services will be easier, more accessible and closer to general public, and for foreign investors.

At such rate of increasing online government services, it looks like in coming years we should expect less bureaucracy and more accessibility from Mongolian government bodies, which should contribute to increasing economic activity in the developing nation.

Mongolia Introduces Investment Protection Council



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We would like to introduce the Investment Protection Council (IPC), one of the effective way to protect rights and interest of the investors and to resolve the disputes involving the foreign investors in Mongolia.

The Investor Protection Council needs to be established in concern with the facilitation of investment related dispute settlement and of favorable environment for the sustainable operation of investors. The Investor Protection Council is established based on an ordinance of the Prime Minister of Mongolia in Dec 2016. That council is composed of Chairman, 16 members, and Secretary. The main formation of the Council’s operation structure should be Council’s session. The decision will be made by majority of the Council members during the session.

The IPC’s Main Roles:

  • Preview and make preliminary prognosis on foreign investment related issues that will be discussed by Cabinet Session
  • Improve investment legal framework, remove duplications and breaches of laws, introduce investment related proposal that made by relevant organizations to Cabinet.
  • Make proposals on implementation of laws and resolutions related to investment, and introduce it to Cabinet. The council should be supernumerary and the Council’s operation should be permanent.

In addition above, one of the main roles of IPC is to protect investors’ right, and solve their grievance (except the cases examined under court or arbitrage). So far 83 compliant and claims submitted by investors to this Council’s Secretariat. As we have been classifying these complaint and claims, there are 40% of them was related to mining, 20% for road, transportation, construction, manufacturing, 10% for information, communication, space technology, 10% for bank, finance, tax, 5% for land, land proprietorship, utilization, 5% for national development, planning, and remaining percentage was claims related to fair competition, as well as supervision, pressure and burden, registration, and authorization activities of the law enforcement agencies.

For example, in relation to the dispute related to the termination of the license of Mobicom Corporation with 100% – a business entity 100% owned by Japan, by the Communications Regulatory Authority, it was further discussed at the Investor Protection Council Meeting and it supported to resolve the investor’s claim. In doing so, KDDI, the Japanese investor, will make additional investments to expand Mobicom’s operations, which indeed has not been resolved over the past 10 years.

LehmanLaw Mongolia LLP suggests our clients this amicable mechanism to resolve the disputes involving them in Mongolia.